What happened this week: Everything was concentrated on the fair  in Bologna. Since the trade had no chance to get together for quite a while, expectations were high. Consequently was the disappointment relatively great when on the first day the attendance was just normal for a May Lineapelle. Wednesday was pretty crowded again and gave some confidence back, that the leather business was not coming to a standstill. The info about the leather business confirmed pretty exactly what one felt already for a while. Upholstery leather suffers a major set back in orders since mid April and most tanners are complaining about a very short order book. Improvement in Europe can not be seen until the holidays. Overseas sales suffer from the declining USD and the massive uncertainty about the SARS influence on business in Asia and eventually in the whole world. When in comes to shoe and leathergoods we found the situation a bit mixed. Many tanners claimed missing orders and poor business, but we met also various who enjoy a strong order book and denied any negative impact on their business so far. Mainly heavy calf leathers and heavy shoe

sides are also reporting steady demand and complain - despite of the weaker price trend - about the difficulty to receive enough and suitable raw material supplies. Automotive leather business stays decent, but also here the near future for car sales and the leather consumption remain in the dark. The biggest problems and subjects of discussion were the very weak USD and the eventual influences of SARS. While the weak USD is severely influencing now the calculations when it come to export sales, imported hides on a USD basis look also daily more attractive. As far as SARS was concerned it remains the problem, that nobody really is in the position to decide on the medium and long term effect. Despite all worries also sales were concluded. The strong demand from Asia for dairy cows persisted and we had again to turn some bids down due to a lack of supply. Calculations were anyway difficult due to the USD rate and with the low kill we preferred not to book anything what we did not needto. In addition we saw also a reasonable demand from traders trying to cover shorts on dairy cows. Low grades found homes in good volume and here we took, what was offered although revenues were 3-4 % below our expectations due to the

falling USD. Most of the regular European long term contracts for bulls were renewed for the next one to two months at prices, which were 2-4 % below the previous ones and with the falling avg. weights margins are again under severe pressure. Current deliveries are massively  influenced by the low kill and will remain a nightmare for some time. The kill: Nothing new. The kill is low with further falling avg. weights. This keeps the supply and delivery mainly of heavy hides under pressure. This will continue for quite some time now. Cattle is hard to get for the abattoirs at present. What do we expect?  We are in a Catch22 situation. The falling USD and the good supply of hides from some overseas markets – in particular the USA – combined with the uncertain situation in Asia do not match nicely with the low kill and short supply we are facing at present. Under the present conditions prices will stay under pressure, just for the reason of the international markets. The general global economical problems are also adding to the concerns. Under these present conditions, trading of European hides should slow down, due to the reduced availability and the rising attraction of USD based origins. So, prices will base in the coming week on currency, quotes and rumours rather than too many trades – we guess.